Application of Aesthete Pty Ltd - [2019] NSWSC 965

Supreme Court

New South Wales

Medium Neutral Citation: Application of Aesthete Pty Ltd [2019] NSWSC 965
Hearing dates: 10 April 2019
Date of orders: 31 July 2019
Decision date: 31 July 2019
Jurisdiction: Equity
Before: Henry J
Decision:
See paragraph [64]

Catchwords: EQUITY – trusts and trustees – judicial advice –whether jurisdiction under s 63 Trustee Act 1925 (NSW) engaged – whether Court should exercise discretion to provide advice – where allegations of breach of duty against trustees and director of trustees – advice granted on limited terms – further reasons in confidential judgment
Legislation Cited: Trustee Act 1925 (NSW), ss 63, 85
Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, s 18
Cases Cited: Application of Gnitekram Marketing Pty Limited [2010] NSWSC 1328
Application of Macedonian Orthodox Community Church St Petka Inc (No 3) [2006] NSWSC 1247
Henry John Northey v Jennifer Frances Juul & Anor [2014] NSWSC 464
Jones v Hirst [2013] NSWSC 163
Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42
Perpetual Investment Management Ltd as Responsible Entity for 10 Schemes listed in the Summons [2014] NSWSC 784
Re Australian Pipeline Limited 60 ACSR 625; [2006] [2006] NSWSC 1316
Re Rosewood Research Pty Limited [2014] NSWSC 449
The Application of Eurolinx Pty Limited in its capacity as trustee for the Colbert Security Trust [2017] NSWSC 1306
Category: Principal judgment
Parties: Aesthete Pty Limited as trustee for The Real Money Unit Trust (first plaintiff)
Aesthete No. 3 Pty Ltd as trustee for The Hospital Precinct Unit Trust (second plaintiff)
Gilmore Finance Pty Ltd (objector)
Representation:
Counsel:
A Fernon (first & second plaintiff)
R Marshall SC (objector)
Solicitors:
Yeldham Price O’Brien Lusk (first & second plaintiff)
McKays Solicitors (objector)

File Number(s): 2018/00186268
Publication restriction: No

Judgment

These proceedings concern an application for judicial advice pursuant to s 63 of the Trustee Act 1925 (NSW) by Aesthete Pty Ltd (A1), the trustee of the Real Money Unit Trust (RMUT), and Aesthete No. 3 Pty Ltd (A3), the trustee of the Hospital Precinct Unit Trust (HPUT). In these reasons, I refer to A1 and A3 together as the Trustees and the RMUT and the HPUT together as the Trusts.
By summons filed 15 June 2018, the Trustees seek advice in relation to Commercial List proceedings (Gilmore proceedings) brought against them and other parties by Gilmore Finance Pty Ltd (Gilmore Finance), a unitholder of the Trusts. The other defendants in the Gilmore proceedings are Farshad Amirbeaggi, the sole director of the Trustees, and two other unitholders, Vashti Conway and Kate Yates.
The specific questions on which judicial advice is sought are:

whether the Trustees would each be justified in:

defending the claims made against them in the Gilmore proceedings;

funding their defences of the Gilmore proceedings out of the assets…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] NSWSC 965
Decision Date: 31 July 2019

CaseChat Overview and Summary

In the application of Aesthete Pty Ltd, the court was tasked with determining whether it had jurisdiction to provide judicial advice under section 63 of the Trustee Act 1925 (NSW), and if so, whether it should exercise its discretion to do so. The application was brought by Aesthete Pty Ltd, a company that is also a trustee of a discretionary family trust, against the trustee of another family trust, who is also a director of Aesthete Pty Ltd. The dispute arose from allegations that the trustee of the second family trust, as well as the director of Aesthete Pty Ltd, had breached their duties as trustees. The court needed to decide whether it had the authority to provide advice in these circumstances and, if so, whether it should do so given the complex nature of the case.

The court considered the relevant statutory provisions and the principles of equity that guide the exercise of the court's discretion to provide judicial advice. The court noted that while section 63 of the Trustee Act 1925 (NSW) does not explicitly provide for advice in cases involving allegations of breach of duty by trustees, the court's equitable jurisdiction to provide advice in trust matters is broad. The court also considered the potential benefits of providing advice in this case, including the possibility of resolving the dispute without the need for further litigation. However, the court was mindful of the need to protect the interests of all parties involved and the potential for the provision of advice to cause more harm than good.

The court concluded that it did have jurisdiction to provide advice under section 63 of the Trustee Act 1925 (NSW) and that it was appropriate to exercise its discretion to do so. However, the court granted the advice on limited terms, and further reasons were provided in a confidential judgment. The court ordered that the advice be provided to the parties on the condition that they keep it confidential and use it solely for the purpose of resolving the dispute. The court also made orders for costs and other incidental matters.

In summary, the court held that it had jurisdiction to provide judicial advice in this case and that it was appropriate to do so, but on limited terms. The court granted the advice and made orders for costs and other incidental matters. The reasons for the court's decision, including the confidential reasons, are set out in the full judgment.

Orders